- Chainlink price has rallied 80% over the last two months, creating a top reversal pattern.
- This formation forecasts a conservative correction of 15% but could extend to 40%.
- A flip of the $9.32 hurdle into a support floor will invalidate the bearish thesis for LINK.
Chainlink price shows an interesting setup that could result in a steep correction and an eventual undoing of the gains. While the former scenario is plausible, the latter is a worst-case outlook and has relatively less chance of manifesting.
Chainlink price ready to undo gains
Chainlink price created a range, extending from $5.26 to $9.32 as it crashed 43% between May 10 and May 12. This sudden collapse formed a double bottom at the range low, which triggered an 80% rally that pushed LINK to sweep the range high at $9.32.
However, this retest of the range high was the third one, giving rise to a triple tap setup. This technical formation forecasts a reversal to collect liquidity.
During the 80% upswing, LINK formed a smaller range, extending from $5.28 to $7.49, where it consolidated for quite a bit before breaking out. Therefore, the range high of this smaller range at $7.49 is the first area of interest.
A breakdown of this barrier will indicate that the worst is yet to come. In such a case, Chainlink price could make a run for the liquidity resting below the double bottom at $5.28. This move would indicate a 40% crash.
However, if Chainlink price manages to stabilize around $7.49, it would constitute a 15% retracement.
LINK/USDT 1-day chart
While things are looking bad for Chainlink price, a flip of the $9.32 hurdle into a support floor will invalidate the bearish thesis for LINK. In such a case, Chainlink price could make a 17% run for the next resistance level at $10.95.